Target areas
He also looks at valuations, which will be based on the current share price and how it reflects the company’s characteristics and the dividend growth prospects.
Araujo also considers the diversification any new company offers to the dividend profile of the fund. The final portfolio consists of 40-50 stocks.
Some areas Araujo has recently been taking advantage of include businesses that benefit from rising energy prices, tapping into transactional infrastructure, and what he sees as the next generation of utilities companies.
He says: “Utilities is a sector that is perceived as defensive, boring and left behind. But these [companies he invests in] are growth businesses with energy transition at their heart – companies that are transitioning themselves or companies that are deploying renewable assets.”
The fund has not been immune to dividend cuts, but still yields 2.14 per cent, something we expect to rise from here. Since launch it has returned 57.5 per cent vs 31.9 per cent for the IA Infrastructure sector average. It has an ongoing charge of 0.7 per cent.
We like the approach taken by this fund towards modern infrastructure investments, such as payment companies and data centres.
Performance supports the approach, making the fund a genuine differentiator to its peers in a fast-growing asset class.
Darius McDermott is managing director of FundCalibre
